The rupee was quoted steady against the American currency in the late morning trade at 66.54 on fresh selling of dollars by banks and exporters on hopes of more foreign capital inflows.
The rupee resumed lower at 66.58 per dollar as against yesterday's closing level of 66.53 at the Interbank Foreign Exchange (Forex) market and dropped further to 66.64 on initial American currency demand from banks and importers on the back of higher dollar in overseas market.
However, it recovered immediately to 66.52 on selling of dollars by exporters before quoting at 66.54 per dollar at 1045 hrs as against 66.53 yesterday.
The dollar climbed yesterday, paring its weekly decline last week. The American unit steadily strengthened against its main rivals during Monday's session after two regional Fed presidents said they would support the Federal Reserve raising interest rates at its April meeting.
Foreign funds (FPP and FIIs) continued their buying spree yesterday as they bought shares worth Rs 1,396.33 crores as per the stock exchanges.
Market benchmark Sensex was quoted lower by 11.06 points or 0.04 per cent to 25,274.31 at 1045 hrs.